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Investors are getting "bulled up" in anticipation that stocks will rally through year's end in reaction to improving economic conditions.

The Federal Reserve is expected to announce on Wednesday adjustments to its epic, $85 billion-a-month bond-buying program that saved the post-credit-crisis global economy from a slump worse than the Great Depression. Wall Street doesn't appear concerned: Its interpretation seems to be that if the central bank believes tapering its monthly bond-buying program (likely by $10 billion to $15 billion) will not harm the economy, then global economic growth is expected.

MANY INVESTORS, HOWEVER, have also hedged their portfolios, should Murphy enact his famed law. One key measure of appetite for equity risk—known as the "fear gauge"—is at a level that suggests investors are not terribly afraid of buying stocks. The CBOE Volatility Index, which was around 20 in late June, has fallen to 13. That 43% decline in some three months underscores the thirst many investors now have for bullish calls.

Institutional investors are placing their economic rebound trades in a bifurcated fashion. Big investors, such as macro hedge funds with $100 million to deploy, are buying sector ETFs and then selling puts and calls on them around specific market-moving events, such as central-bank meetings or economic reports.

Investors less worried about liquidity are focusing on buying individual stocks—specifically, the top holdings in these economically sensitive ETFs. They're also buying associated calls with expirations into January and beyond to harness the expected stock-price lift due to the economic improvement.

In many ways, the action du jour is fancy momentum trading. Many hedge-fund managers are trailing their benchmark indexes and are desperate to catch up. If events unfold according to their plan, all's well. If not, well, there will probably be a few less hedge funds around come winter.

CHANGES IN THE DOW JONES Industrial Average prompted a re-examination of the idea that blue-chip stocks are practically immune to time's ravages. A recent MIT Technology Review essay, "Technology Is Wiping Out Companies Faster Than Ever," has a sharply different view. It found that in 1958, companies in the Standard & Poor's 500 index could expect to remain there for 61 years. Today, the average expectation is 18 years. Why? Technology. Innovative companies evolve; those that do not, wither.